An independent Scotland would have to give up control over key elements of its economy if it wants to keep on using the pound, Chancellor George Osborne has warned.

Mr Osborne, in Glasgow to launch a Treasury analysis of the implications of a Scottish vote for independence in next year's referendum,

"I think it is unlikely that the rest of the United Kingdom would agree to or we could make work a euro-style currency zone with Scotland," he told the BBC Radio 4 Today programme.

"It is all very well for the SNP to assert that's what they would like. I think it is unlikely that it could be made to work and therefore if Scotland wants to keep the pound the best way to do that is to stay in the United Kingdom.

"Scotland could go on using the pound, rather like Panama uses the American dollar, but it would have absolutely no control at all over its currency or its macroeconomic framework. There are some countries in the world that use other countries' currencies without their consent if you like, but it's a very, very difficult option for a country to undertake."

However, Scottish Finance Secretary John Swinney warned the Chancellor that he was "playing with fire". He said Scotland could walk away from its share of the UK's debts if the Westminster government refuses to come to "a rational and considered agreement".

"What the Treasury paper is designed to do is to make things sound as difficult and as obstructive as possible. I don't really think it is a particularly helpful contribution to the debate," he told the Today programme.

"He is arguing in his paper this morning that the UK would be the successor state, that it would hold on to the pound and we somehow couldn't get access to that. If that's his position, then the UK as the successor state is obliged to hold on to all of the debt. We would be liberated from a population share of UK debt of £125 billion.

"If that's the kind of game of negotiation the Chancellor wants to play, he's welcome to do that."

Mr Osborne said that if an independent Scotland did not want to join the euro or set up its own currency, the rest of the UK was unlikely to want to join it in a currency union. "It is not clear that it would be in the interests of the rest of the United Kingdom to enter into a euro-style currency zone with Scotland," he said.